NEW LEADERSHIP AT VOLKSWAGEN UNION

UNCLAS SECTION 01 OF 03 MEXICO 000302 SIPDIS SIPDIS DEPT FOR DRL/AWH AND ILCSR AND WHA/MEX, DOL FOR ILAB E.O. 12958: N/A TAGS: ELAB ECON PROV PHUM EIND PINR MX SUBJECT: NEW LEADERSHIP AT VOLKSWAGEN UNION REF: 07 MEXICO 5935 ¶1. SUMMARY: In early January a new leadership team took formal control of the union at the Volkswagen automobile assembly plant in the central Mexican state of Puebla. The Puebla Volkswagen plant employs approximately 11,000 workers and is one of, if not the, single largest employers in the state. The Volkswagen auto workers union does not belong to any of Mexico,s traditional national labor federations and is instead affiliated with the National Workers Union (UNT) which has very close ties to the PRD, the country,s main opposition political party. During the campaign the group which eventually won the union,s election held late 2007 had considered leaving the UNT which would have had a significant negative impact on that national labor federation and by extension on the PRD. Because of the size and importance of the union many feared the possibility of violence as the competition for union control intensified. In the end, perhaps because of a significant police presence by state authorities, the union election and ultimate transfer of power took place peacefully. The main issue in this election was a struggle between an established union leadership perceived as being overly concerned with its own pay and perks, and a newer group of union leaders willing to challenge management on issues such as major changes in work rules that could affect productivity. End SUMMARY. OUT WITH THE OLD -------------- ¶2. During the last weeks of 2007 the Independent Automobile Workers Union of Volkswagen of Mexico (SITIAVW) in the central Mexican state of Puebla held internal elections to choose a new leader and a new executive committee. The winner of the election and his leadership team will serve a four year term of office. The Volkswagen assembly plant in Puebla employs about 11,000 workers of whom some 9,500 are unionized. Volkswagen is one of, if not the, single largest employers in Puebla and its impact on the state,s economy is considerable. In addition to the potential economic affects of the outcome of the SITIAVW election, the ballot vote also had significant implications for both the state of Puebla and for organized labor in Mexico at the national level. ¶3. The SITIAVW is affiliated with the second largest labor federation in Mexico, the National Workers Union (UNT). Unlike many older and more traditional labor federations in Mexico, the UNT has no formal ties to any particular political party and describes itself as an &independent8 labor organization. However, informally, the UNT is closely linked to Mexico,s main opposition party, the Party of the Democratic Revolution (PRD). Control of the SITIAVW is an important source of strength for the UNT and by extension for the PRD. During the campaign leading up to the election, one of the leading groups contending for control of the SITIAVW indicated that if elected it might well withdraw the union from the UNT. ¶4. As in other parts of Mexico, politicians in Puebla often campaign on topics related to job creation and or job retention. Anything that potentially touches on employment issues, particularly with regard to one of the state,s largest employers, is closely watched by the authorities. Consequently, the state government of Puebla, which is controlled by Mexico,s former ruling party, the Institutional Revolutionary Party (PRI),was particularly vigilant in monitoring, and ultimately policing the SITIAVW election both for economic and political reasons. With regard to economic reasons, Puebla,s government wanted to be prepared for a possible change in the business environment if control of the union changed to a group intent on being more confrontational with Volkswagen management. In political terms, the authorities wanted to be ready to take advantage of a change in leadership that might leave the UNT and thereby sever union,s ties with Mexico,s main opposition party. IN WITH THE NEW MEXICO 00000302 002 OF 003 -------------- ¶5. At the height of the SITIAVW election there were eight different factions vying for control of the union but in the end only two of these groups had any real chance of winning. The two main contenders were named &21st Century Labor Justice8 headed by Jose Luis Rodriguez Salazar and &Union Power8 led by Victor Jaime Cervantes Rosas. This was the second time these two power group competed for control of the SITIAVW. In the previous election in 2003, the group lead by Rodriguez Salazar defeated Cervantes Rosas, Union Power group by winning 20 percent, as compared to 11 percent of the vote. That 2003 victory was the second win for Rodriguez Salazar, thereby allowing him to serve as the SITIAVW,s Secretary General for a total of eight years. Rodriguez SIPDIS Salazar and his group had hoped to win a third four year term of office but it was not to be. In the 2007 vote Cervantes Rosas, group defeated Rodrigues Salazar,s with 34 percent of the vote compared to 15 percent of the vote. ¶6. The main focus of this last election appears to have been a struggle between the established union leadership that had clearly benefited directly from its eight years in power and a challenger prepared to take on management more aggressively. The challengers, Cervantes Rosas, Union Power group, made a great deal of the fact that while Rodriguez Salazar started out as just a senior worker he had now moved to an upscale house, been featured on CNN as one of the ten most powerful labor leaders in Mexico and had been invited to serve as a PRD opposition party city councilman in the PRI dominated administration of Puebla,s state capital. ¶7. Fairly or not, Rodriguez Salazar,s group was blamed for the fact that total employment at the Volkswagen plant had dropped from 15,000 to 11,000 jobs during the eight years that &21st Century Labor Justice8 had control of the union. The clear message of the ultimately successful campaign of Cervantes Rosas, group was that the Rodriguez Salazar was more interested in the pay, perks and politics that leadership of the union gave him than he was in the welfare of the workers. With such a sharp focus on how well Rodriguez Salazar had personally done by serving as SITIAVW leader, the authorities in Puebla feared the possibility of violence as the competition between the two leading groups intensified. Consequently, state law enforcement and labor authorities took steps to closely monitor the entire election process and to deploy a substantial police presence at polling places well in advance of actual voting. In the end, the election took place without violence and without any significant public disturbances with a large margin of victory won by Victor Jaime Cervantes Rosas and his &Union Power8 groups. SITIAVW,S NEW UNION LEADERSHIP HIGHLIHTS ITS POSITIONS -------------- -------------- ¶8. &Union Power8 group led by Cervantes Rosas is composed of a team of 42 workers who represent the eight different industrial divisions at the Volkswagen plant in Puebla. Although the winning Union Power group focused the majority of its campaign efforts underscoring how much Rodriguez Salazar and his group had directly benefited from their years of union leadership, they highlighted two other themes during the course of their electoral campaign. One of these themes was openly political and the other more specifically related to the production operations of Volkswagen,s Puebla facility and management,s plans to change current work rules. ¶9. In discussing political plans, the Union Power group repeatedly stated its intention to review SITIAVW,s long standing affiliation with the UNT to consider whether the time had come to withdraw from this national level labor federation because it did not see any clear advantage to being associated with this national federation. Specifically being part of the UNT did not get SITIAVW members anything they would not have gotten on their own. At several points during the campaign Cervantes Rosas pointedly refused to rule out the possibility that the SITIAVW might join one of Mexico,s other national level labor federation. In order to retain the SITIAVW within the UNT,s ranks its national leader, Francisco Hernandez Juarez, personally lobbied MEXICO 00000302 003 OF 003 Cervantes Rosas, urging him not to take the Volkswagen autoworkers union out of the national labor federation. In the end, Cervantes Rosas agreed to remain in the UNT for an additional year at the end of which the SITIAVW would review its relations with the national federation and make a definitive decision at that time. ¶10. The other prominent theme of Union Powers, campaign was its complete rejection of Volkswagen,s management,s plan to implement what the union groups saw as a significant change in work rules. According to the Union Power group, Volkswagen management wants to institute a policy of greater labor flexibility. From Union Powers, perspective this increased flexibility is viewed as a way to increase the amount of work employees are required to do without any meaningful increases in salary. Volkswagen,s management,s position is that the increased labor flexibility is simply an expansion of what is already being done in some division of the company,s Puebla operations. This change in work rule flexibility would provide significant cross training to Volkswagen employees as a way of increasing their productivity. Post notes that changes Volkswagen wishes to expand upon are already being implemented in at least two of the three Ford assembly plants in Mexico (Reftel) and that Ford copied these work rule changes from several Japanese auto manufacturers as a way to boost not only productivity but also competitiveness. ¶11. The Union Power faction has publicly stated its wish to have a productive relationship with Volkswagen management but indicated that such a relationship must be based on mutual respect. The new union leadership says it is prepared to negotiate with Volkswagen on any other subject, except change in work rule flexibility. The new union leadership says, although with presenting any evidence to support its assertion, that labor costs in Mexico are already the lowest at any of Volkwagen,s operations worldwide and it sees no reason to take steps (like work rule flexibility) that would further reduce costs without greater compensation for workers. Interestingly Cervantes Rosas has indicated to the press that the union will not seek any substantial increase in worker compensation at his time nor in the immediate future. COMMENT -------------- ¶12. The change in leadership of the Volkswagen autoworkers union offered a demonstration of something that is rare in Mexican labor politics -- namely workers democratically choosing who will represent them. The leadership group that lost the election gracefully accepted its defeat and efficiently handed over power to its successor. The PRI controlled state government of Puebla, which has a reputation for often seeking to obtain a partisan advantage, remained neutral during the electoral process. This neutrality reqiired notable restraint on the part of the state authorities given that the faction that won the election had signaled a willingness to at least consider changing the union,s labor and political affiliation. At the national level, the UNT lobbied hard to hold on to the SITIAVW union and for the moment it appears this PRD linked labor federation was successful. Now that the new SITIAVW has taken office it remains to be seen what type of relationship it will establish with company management and what compromises it will make to help Volkswagen follow American and Japanese automakers practices that have proven effective in increasing productivity. Visit Mexico City's Classified Web Site at http://www.state.sgov.gov/p/wha/mexicocity and the North American Partnership Blog at http://www.intelink.gov/communities/state/nap / GARZA